CHARLESTON, W.Va. — A bill to allow money generated by the state’s medical cannabis program to be banked began working its way through the Legislature Thursday morning.
The House Banking and Insurance Committee approved HB 2538 — sponsored by committee chair Eric Nelson, R-Kanawha, with 10 co-sponsors of both parties — and sent it on to House Judiciary Committee.
As amended in committee, the bill creates two state funds. The primary one is the Medical Cannabis Program Fund designed to receive license fees, penalties and taxes associated with the program. The other is the Treasurer’s Medical Cannabis Fund created to receive all fees charged to the institution by the treasurer and to be spent on oversight and compliance expenses.
The treasurer will select by competitive one or more financial instruction to handle banking services for the fund. The institution may be a bank, credit union a “non-bank financial institution.”
Once federal law changes and it becomes legal for banks to handle program money, the contract or contracts will end and the money will be transferred to the institution holding the state concentration account, meaning the single account it uses to write checks.
Diana Stout, chief counsel with the state treasurer’s office, told members that the bank holding the concentration account, BB&T, won’t handle cannabis money. Other institutions have expressed interest but won’t step up. So this bill is an effort to stir the interest of credit unions to bid on a contract.
A good portion of the discussion focused on a hold-harmless paragraph in the bill that says the state will protect and defend any state employees who face legal issues raised by their involvement in the banking services.
Delegate Isaac Sponaugle, D-Pendleton, said this paragraph is connected to concerns of “overzealous federal prosecution” by U.S. Attorney Mike Stuart.
Committee counsel told members that this paragraph was removed from the committee substitute version of the bill because there were concerns about its constitutionality in terms of the state extending credit to outside vendors.
Discussions were ongoing on how to fix that, but in the meantime a sentence was added prohibiting the state commissioner of financial institutions from penalizing, incentivizing or trying to impair business functions under the act.
Stout told the members that the treasurer’s office would to have the hold-harmless language in the bill, in light of Stuart’s outspoken opposition to cannabis and his attempt to bring civil litigation against hemp farmers. “The office is a little bit worried.”
She said the simplest fix would be to add the phrase “to the extent permitted by law” to thje beginning of the stricken paragraph.
Sponaugle offered an amendment to restore that language with the added phrase Stout suggested, and members approved it.
Delegate Eric Porterfield, R-Mercer, offered an amendment forbidding any future legislature from using the Medical Cannabis Program Fund from handling money for a recreational cannabis program.
Delegates who opposed the amendment pointed out that it’s not actually legal to dictate the actions of a future legislature, and that the amendment was moot because recreational cannabis would require entirely new legislation and this bill deals only with medical cannabis funds.
The amendment failed. The bill then passed in a voice vote, with Porterfield the only vote against.
It now goes to Judiciary.